Shell in Rare Reverse-Arbitrage Deal


By Reuters 2016-02-25 01:01:20

Anglo-Dutch energy giant Shell has chartered a vessel to make a rare reverse-arbitrage shipment of fuel oil from Singapore to Fujairah, shipping data in Reuters showed.

The Aframax vessel Olympia I was loaded with 80,000 tonnes of fuel oil in Singapore on February 16 and is currently off the coast of East Sri Lanka, underway to Fujairah in the United Arab Emirates, the data showed.

Its estimated time of arrival is on March 2.

Three separate fuel oil traders said that the reverse-arbitrage cargo is most likely of a specific grade intended for use in blending to achieve desired product specifications.

Shell, Europe's largest oil major, declined to comment.

"In keeping with our disclosure policy, we do not comment on details of commercial agreements," said a Shell spokesperson.

Although uncommon, a London-based trader said that this is not the first time Shell has made such shipments.

"They bring in grades not usually available in the Arabian Gulf on the backhaul as a blendstock," said the London trader.

In its previous charter, shipping data in Reuters showed that the Olympia I transported 80,000 tons of 180 centistoke fuel oil from Ras Tanura in Saudi Arabia to Singapore between January 26 February 10.

The charterer, however, was not reported.

Fuel oil usually flows from the Americas, Europe and the Arabian Gulf to Asia, the world's largest consumer of high-sulphur fuel oil, primarily for use in electricity generation and powering ships.

"These sorts of reverse-arbitrage cargoes are generally rare. Personally, it’s the first one I've seen in years," said a Singapore-based trader.